An Investigation Into Wastewater Treatment in the Reservoir Basin

A Probe International Study

By

THE GREEN VOLUNTEERS ASSOCIATION

Wu Dengming Lead Researcher

February 2013

PROBE INTERNATIONAL EDITOR: PATRICIA ADAMS

TABLE OF CONTENTS

INTRODUCTION Page 1 BASIC INFORMATION ON METROPOLITAN CHONGQING − Area and Population Page 1 − Table 1: Districts of Metropolitan Chongqing Page 1 − Industry Overview Page 2 Page 2 WASTEWATER TREATMENT IN METROPOLITAN CHONGQING − Information Sources Page 3 − Basic Information Page 3 − Sewage Treatment Plants Page 3 − Table 2: Treatment Plants Managed by Chongqing Water Group Co. Page 5 Ltd. and Chongqing Water Resources Investment Group Co. Ltd. Page 6 − Figure 1: Chongqing Water Group Co. Ltd. and its Subsidiaries − Figure 2: The Distribution of Wastewater Treatment Plants in Page 8 Metropolitan Chongqing Page 10 − Current Challenges to Wastewater Treatment in Metropolitan Chongqing Page 11

WASTEWATER TREATMENT IN THE THREE GORGES RESERVOIR REGION (BELOW METROPOLITAN CHONGQING) Page 14

RECOMMENDATIONS Page 15 CONCLUSIONS Page 17 ENDNOTES Page 18 RESOURCES Page 21 APPENDIX 1: Wastewater Treatment in Metropolitan Chongqing Page 22 APPENDIX 2: Large and Medium-sized Wastewater Treatment Plants in Metropolitan Chongqing Page 23

APPENDIX 3: Wastewater Treatment Plants under Construction, Extension, and Proposed for Nine Districts of Metropolitan Page 25 Chongqing

Introduction The Three Gorges Reservoir basin area is 490,000 square kilometres. The water quality of this basin directly affects the safety of all those who use and depend on it. Though the Chongqing Municipal Government1 has invested in more than 40 new large and medium-sized wastewater treatment plants in important cities in the Three Gorges Reservoir Region along the River, the decreased flow rate of water caused by the construction of the has robbed the river of its ability to self-purify. This decline in the rate of flow also means that pollutants carried by tributaries cannot be diluted or flushed away quickly by the Yangtze River, causing serious eutrophication in some tributaries.

2 In 2010, Metropolitan Chongqing , the old city within the The Three Municipality of Chongqing, dumped 451,800,000 tonnes of industrial wastewater and 829,330,000 tonnes of domestic Gorges Dam has wastewater into the Yangtze. The chemical oxygen demand (COD) robbed the of this wastewater was 234,500 tonnes.3 The sewage treatment Yangtze River of capacity of Metropolitan Chongqing is an important factor its ability to self affecting the water quality and ecology of the Three Gorges purify. Reservoir.

In addition, downstream of Metropolitan Chongqing, hundreds of towns and chemical complexes are dumping industrial and domestic waste into the Yangtze, adding to the grave threat to water quality in the 600 km long reservoir area.

This paper reviews wastewater production and treatment in the Three Gorges Reservoir Region with a special focus on Metropolitan Chongqing, which sits at the head of the reservoir created by the Three Gorges Dam. It also recommends institutional and regulatory reforms to reduce pollution, expand wastewater treatment, and protect water quality for all riparians living downstream of Metropolitan Chongqing,

Basic Information on Metropolitan Chongqing

Area and Population

Located at the confluence of the Yangtze River and the , Metropolitan Chongqing lies at the tail of the Three Gorges Reservoir Region. Spanning an area of about 5,500 square kilometres, Metropolitan Chongqing is home to a population of over 7.4 million (excluding its floating population). Metropolitan Chongqing consists of nine districts: Yuzhong, Dadukou, Jiangbei, Shapingba, Jiulongpo, Nan'an, Beibei, Yubei, and 'nan (see Table 1). 1 Table 1: Districts of Metropolitan Chongqing

Population Area (km2) (in thousands)

Yuzhong 22.56 630

Dadukou 103 300

Jiangbei 213 738

Shapingba 396.2 1,000

Jiulongpo 432 1,080

Nan'an 265 759

Beibei 755 684

Yubei 1,452 1,340

Ba'nan 1825 918

Total 5463.76 7,449

Industry Overview

The economic and technological development zones in Metropolitan Chongqing include:4

1) Chongqing Chemical Industrial Park 2) Chongqing Economic & Technological Development Zone 3) Chongqing Hi-Tech Industry Development Zone 4) Chongqing (CNNZ) 5) Chongqing Export Processing Zone 6) Jianqiao Industrial Park

2 Wastewater Treatment in Metropolitan Chongqing

Information Sources5

We obtained sewage treatment information on Metropolitan Chongqing using the following means:

1) Interviews with government officials and administrative staff at sewage treatment plants; 2) Visits to government departments such as the environmental protection department, water resources department, water authority, and municipal administrations; More than 3,000 3) Field trips to sites, and interviews with residents living near km3 of sewage treatment plants; 4) Searches of archived documents. wastewater is produced daily in The information collected includes the locations of sewage Metropolitan treatment plants in the nine districts of Metropolitan Chongqing; Chongqing, while the construction status of future and expanding sewage treatment the treatment plants; the capacity, process, and efficiency of sewage treatment; plants in the the wastewater disposal and the treatment of sludge from sewage treatment plants; the sewage drain infrastructure; the rate of region are only sewage collection; and the role of the sewage treatment designed to treat administration department. 1,416.4 km3 of wastewater per We experienced several obstacles in collecting this data, namely, day. securing permission to enter sewage treatment plants, as non-staff are prohibited from entering these plants. Once granted access, we faced problems accessing data, taking photos in plants, and organizing transportation to sewage treatment plants in remote areas.

Basic Information

3 More than 3,000 km of wastewater is produced daily in Metropolitan Chongqing, half of which comes from domestic sources, while the other half comes from industrial sources. The industrial wastewater is pre-treated before being delivered to the wastewater treatment plants. There are 19 large and medium-sized wastewater treatment plants in the nine districts we studied. Together, they are designed to treat 1,416.4 km3 of wastewater per day.

3 The actual volume treated daily of 1,609 km3 represents about 54% of the total wastewater produced in Metropolitan Chongqing each day. Meanwhile, up to a hundred small treatment plants run by villages, towns, streets, and small and medium-sized industrial park zones treat an additional 510 km3 of wastewater on a daily basis, accounting for 17% of the total wastewater produced in Metropolitan Chongqing. Thus, of the 3,000 km3 of wastewater 3 produced in Metropolitan Chongqing every day, only 2,119 km , 71% of the average daily wastewater volume produced, is treated.

With the recent economic growth and urban expansion of the city, the population in Metropolitan Chongqing is expected to increase to more than ten million by 2020. As a result, the amount of wastewater is also likely to increase. To manage the city’s Only 71% of the projected needs, the Chongqing municipal government is planning to expand existing wastewater treatment plants and build new ones. wastewater of the 3 Currently, 14 new wastewater treatment plants are either under 3,000 km of construction, being expanded upon, or are in the planning stages, wastewater which will increase the daily treatment capacity by 830 km3. If produced in completed as planned, the total designed daily wastewater Metropolitan treatment capacity will be 2,246.4 km3 (830 km3 + 1,416.4 km3 = 3 Chongqing every 2,246.4 km ). If those 33 plants can operate at 13.5% over capacity, as the existing 19 treatment plants have been doing, the day is treated. total daily treatment capacity will total 2,549.4 km3 (2,246.4 km3 + 303 km3). Adding the 510 km3 treated by the hundred small treatment plants run by villages, towns, streets, and small and medium-sized industrial park zones mentioned above, the total daily wastewater treatment capacity will be 3,059.4 km3. This level of wastewater treatment meets the current level of wastewater production of 3,000 km3, but does not allow for the inevitable increase in wastewater that will come from the population and economic growth expected by 2020. It also assumes that the plants can continue to operate at 13.5% over capacity and continue to meet water quality standards. Meeting these conditions is possible, but challenging. In Metropolitan Chongqing, treatment plants have been designed to meet high standards, and wastewater treated has generally met the Grade 1 water quality standard6 with COD below 60 mg/L (milligrams per litre). Presently, all of the 19 large and medium-sized treatment plants currently operating are treating water to a level of COD below 60 mg/L, with the majority of the plants investigated by this study meeting COD levels between 30- 60 mg/L. Whether or not they will continue to meet the COD standard of 60mg/L and continue to run the plants at 13.5% over capacity will depend on management standards.

4 Management standards, in turn, depend on incentives and penalties for failing to meet standards; transparency of operations to the press and the public; and the accountability of the wastewater treatment enterprises, their regulators, and lawmakers to the Chinese public.

Sewage Treatment Plants

Wastewater treatment plants are situated according to characteristics of geography and topography, population density in urban areas, and the planning of industrial zones. The sewage treatment plants in Metropolitan Chongqing are divided into four Whether or not categories, depending on their financing, ownership, and purpose. treatment plants These categories include: large and medium-sized sewage will meet COD treatment plants financed by the central government for point- 7 standards in the source pollution treatment, medium and small-sized sewage future will treatment plants financed by local governments, sewage treatment sites built in factories and industrial zones, and sewage treatment depend on sites built in small towns in the suburbs. management standards, which The construction funds for wastewater treatment plants in are contingent on Metropolitan Chongqing come from three major sources: the state, incentives, World Bank loans (which were used to build wastewater treatment plants such as Jiguanshi and Tangjiatuo), and district and penalties, and 8 municipal governments. accountability to the Chinese 1. Large and medium-sized sewage treatment plants financed by public. the central government

These plants are run by state sewerage companies – such as the Chongqing Water Group Co. Ltd. and Chongqing Water Resources Investment Group Co. Ltd.– and are built and financed by the government. Details on the services of these two companies are provided in Table 2. The standard of sewage treatment at these plants is higher and better regulated than at wastewater treatment plants financed by local governments. There are 11 such treatment plants, including the Jiguanshi Sewage Treatment Plant (Nan’an District) with a daily treatment capacity of 600 tonnes, the Tangjiatuo Sewage Treatment Plant (Jiangbei District) with a daily treatment capacity of 300 tonnes, and the Tuzhu Sewage Treatment Plant () with a daily treatment capacity of 50 tonnes.9 These state-run plants are subject to very specific, standardized operational requirements and regulated management, meaning that they have high rates of compliance to the regulated treatment standards.

5 The Chongqing Downtown Drain Company, Three Gorges Water Company and Haoyang Water Company (under the Chongqing Water Resources Investment Group Co. Ltd.), and Chongqing Water Group Co. Ltd. are the companies that operate these plants. The eleven treatment plants have a total daily treatment capacity of 1,285 tonnes, accounting for two-thirds of the point-source 10 pollution treatment in Metropolitan Chongqing.

Table 2: Treatment Plants Managed by Chongqing Water Group Co. Ltd. and Chongqing Water Resources Investment Group Co. Ltd.

CHONGQING WATER CHONGQING WATER Company RESOURCES INVESTMENT GROUP CO. LTD. GROUP CO. LTD. Districts: Shuangqiao, Districts: Yuzhong, Qianjiang Longbaopian Jiangbei, (sub-district in Wanzhou Shapingba, district), Chayuan (sub- Jiulongpo, district in Nan'an Dadukou, Nan'an, district), and the western Ba'nan, Yubei, side of the Zhongliang Beibei, Wanzhou, Mountain (between Peiling, Changshou, Jiulongpo and and Wansheng Shapingba Districts) Service Counties: Area Rongchang, Bishan, Counties: Zhong, Covered Tongliang, Dazu, Wulong, Wushan, Chengkou, Xiushan, Dianjiang, Tongnan, Youyang, Fengjie, Pengshui, and Shizhu, Kaixian, Liangping Yunyang, Fengdu, , and Qijiang Cities: Jiangjin City, Nangchuan City, and Hechuan Cities: Yongchuan City City

Note: Sewage treatment projects in Yongzhou City, Bishan City, Tongliang City, Dazu City, Chengkou City, Youyang County, and Qijiang County will be transferred to Chongqing Water Resources Investment Group Co. Ltd. once construction of new plants and the expansion of existing plants is completed.

6 ¾ Chongqing Water Group Co. Ltd.

Chongqing Water Group Co. Ltd. (see Figure 1 for information on its subsidiaries) collects domestic sewage, industrial and commercial wastewater, rainwater, and other wastewater from municipal sewage pipe networks, and treats their wastewater according to state environmental protection standards, contributing to improved water quality on the Yangtze River upstream, and in the Three Gorges Reservoir. After treatment, the wastewater is Chongqing Water dumped directly into the Yangtze. The Group's area of service Group Co. Ltd. includes the nine districts in Metropolitan Chongqing, as well as many districts outside of Metropolitan Chongqing. Within the treats their larger Municipality of Chongqing, they service , wastewater , , , according to state Nanchuang District, , Wulong County, Wushan environmental County, , Hechuan City, Jiangjin City, Tongnan protection County, Pengshui County, Liangping County, Yongchuan City, standards, Tongliang County, Dazu County, , , , Kaixian County, , Fengdu contributing to County, Shizhu County. The Group's area of coverage does not improved water include the region covered by the Sino French Tangjiatuo quality on the Wastewater Treatment Co., Ltd., which is authorized by the Yangtze River Municipality of Chongqing to service a population of 2 11 upstream, and in approximately 1 million people covering a 90km area. the Three Gorges By December 31, 2009, the company serviced 8.9 million urban Reservoir. residents in an area covering 755.2 km2, representing 72% of the market share for Metropolitan Chongqing's wastewater treatment. The company monopolizes the wastewater treatment business with the permission of the Municipality of Chongqing. Thus, it receives payment from the government of Chongqing Municipality under the condition that it provides sufficient, continuous, and 12 standardized wastewater treatment service.

7 Figure 1: Chongqing Water Group. Co. Ltd. and its Subsidiaries

¾ Chongqing Water Resources Investment Group Co. Ltd.

The Chongqing Water Resources Investment Group Co. Ltd. was established on November 28, 2003, with the approval of the municipal government. It was the first provincial-level water resources investment company in .

The company is responsible for, among other things, the operation and management of state-owned water resource assets, water supply, and wastewater treatment services in cities and towns. It is also responsible for the investment and operation of wastewater treatment projects, river management, water and soil conservation projects, as well as for the development of renewable resources such as hydropower and wind power. Currently, the company has 45 subsidiary companies, with more than 4,500 employees, and project offices in 34 districts and counties in Chongqing Municipality.13

8 The company constructed 16 water treatment plants in Kaixian, Tongliang, and Qijiang counties, providing an additional 700 million tonnes of water which benefit 4.5 million people in more than 20 districts and counties by improving the quality and accessibility of potable water. With the construction and operation of drainage projects in 11 districts and counties, the company added an extra daily wastewater treatment capacity of 200,000 tonnes, which plays an important role in improving the urban living environment and promoting the "healthy Chongqing" and "livable Chongqing" campaigns. According to its own estimate, the company will accrue total assets of 70 billion RMB, a gross Smaller income of 3 billion RMB, and a net profit of 1.07 billion RMB, by 14 wastewater 2015. treatment plants 2. Medium and small-sized wastewater treatment plants financed use wetland by local governments biotechnology, a technique well Compared to the kinds of plants described above, medium and worth promoting small-sized wastewater treatment plants tend to be of poorer in Chongqing quality in terms of construction, management, and operation. because these These plants are located mainly in the districts of Shapingba, Jiulongpo, and Yubei, and are responsible for one-third of the total facilities are treated wastewater in Metropolitan Chongqing. small in size, have low capital 3. Wastewater treatment facilities operated by enterprises within requirements, industrial zones low operating There are eight treatment facilities that are operated by enterprises costs, and achieve within industrial zones. Of the eight treatment plants, those plants high rates of constructed and operated by state-owned enterprises are running treatment well, while those plants constructed and operated by medium and efficiency. small-sized factories and industrial zones are not. The latter routinely discharge industrial wastewater without any treatment at all, resulting in incidents of wastewater contamination.

4. Wastewater treatment facilities built by small towns in suburban areas

There are more than 30 wastewater treatment facilities built by small towns in suburban areas, with a combined daily treatment capacity of over 100 tonnes. They mainly use wetland biotechnology to treat the wastewater, a technique well worth promoting in Chongqing, because these facilities are small in 15 size, have low capital requirements and low operating costs, and achieve high treatment efficiencies.

9

Figure 2: The Distribution of Wastewater Treatment Plants in Metropolitan Chongqing

10 Current Challenges to Wastewater Treatment in Metropolitan Chongqing

Geographical challenges to Metropolitan Chongqing's wastewater treatment infrastructure

Chongqing’s mountainous terrain and numerous rivers and lakes make it particularly difficult for Metropolitan Chongqing to build centralized wastewater collection systems. In addition, construction of water treatment facilities in different parts of the region has been staggered, leading to infrastructure In many districts inconsistencies. Thus, in the context of the total treatment needs of [of Metropolitan the large and populous Metropolitan Chongqing, most wastewater Chongqing], low- treatment plants are fairly small. The daily treatment capacity of these plants ranges from 20,000 to 100,000 tonnes, with very few quality plants having a daily treatment capacity over 100,000 tonnes. wastewater drainage Low collection rates of wastewater and slow construction of new networks and water treatment plants in Metropolitan Chongqing poor maintenance has resulted in Due to Metropolitan Chongqing’s mountainous terrain, the collection rate of wastewater is estimated to be as low as 79%. In broken pipes and many districts, low-quality wastewater drainage networks and poor even sewage maintenance has resulted in broken pipes and even sewage leaks, leaks, leading to leading to contamination and a further lowering of the overall contamination collection rate of wastewater. and a further In terms of the construction of new wastewater treatment facilities, lowering of the has completed 41.7% of the planned projects, wastewater the highest percentage of any of the nine districts. The construction collection rate. of new sewage treatment facilities is slower in , , and new development zones in the northern area, such as the Chongqing New North Zone.

Meanwhile, wastewater treatment expansion projects are being carried out more slowly than planned, including the third phase of the Tangjiatuo wastewater treatment plant in Jiangbei District, the Caijia wastewater treatment plant in , and the Xipeng wastewater treatment plant in Jiulongpo District.

Moreover, wastewater treatment projects in 19 townships in the districts such as Jiulongpo, Beibei, and Ba'nan have not even started yet.

11 Low collection rate of wastewater in the outskirts of downtown and urban-rural fringe areas, and shortage of finances for infrastructure and operating expenses

In industrial zones on the outskirts of downtown areas and in residential zones in urban-rural fringe areas, fewer wastewater treatment projects have been constructed because of a lack of funding – local governments are strapped for cash – and sewage treatment plants are expensive. Wastewater is dumped directly into small streams as a result. Chongqing has Difficulties Paying for Wastewater Treatment developed rapidly since it became a Municipal wastewater treatment authorities have found it difficult to cover the high costs of water treatment simply through municipality wastewater treatment fees collected from residents. Chongqing has fifteen years ago, developed rapidly since it became a municipality directly under the but the city has central government fifteen years ago, but the city has had difficulty had difficulty reforming and modernizing its social services and physical reforming its infrastructure fast enough to keep up with the growth of the city. social services As a result, high unemployment rates and low social security payments (payments are as low as 320 RMB per month in and physical Chongqing) make it difficult for some citizens to afford the tap infrastructure water fee, which has increased from about 1 RMB/tonne to more fast enough to than 3 RMB/tonne.16 keep up with the growth of the Of the 3 RMB/tonne tap water fee that urban citizens currently city... high pay, 1.1 RMB/ per tonne is for wastewater treatment. Many people still feel that this rate is difficult to pay as most citizens earn a unemployment monthly income of less than 2,500 RMB, and are faced with rates and low relatively high prices for all goods and services. social security payments make it Therefore, wastewater treatment plants have difficulty making the difficult for some necessary investments to upgrade their facilities, let alone repaying citizens to afford the debts incurred from investing in their initial fixed capital. The operation and maintenance costs are even higher if the investment the tap water fee. and operation costs of sludge treatment are taken into account. If the price of wastewater treatment was based on its full cost, urban residents would have to pay two to four times as much as they pay now, which is unfeasible.

Currently, the widely used wastewater treatment process includes

conventional activated sludge processes, oxidation ditch, AB, A/O,

A2/O and the newly developed SBR17 process in Metropolitan

12 Chongqing.18 These treatment methods require expensive infrastructure and incur high operational costs, which means there are fewer funds available for the construction of more wastewater treatment facilities and for routine maintenance expenses of the existing infrastructure in Chongqing.

Lack of knowledge, experience, measures, and funds concerning pollution control has led to unabated pollution and inefficiencies in wastewater management

...the government First, the key to improving water quality in the Three Gorges Reservoir Region lies in stopping the pollution at its source. ― both at the municipal and Second, most wastewater treatment plants in China are financed by local level ― the central government, but the responsibility to run them and lacks the maintain them is handed over to local governments. These local administrative governments lack the financial means and state-of-the-art means and technology to ensure high-quality water and sound water ecology in the Three Gorges Reservoir Region on the Yangtze River. To regulatory clout put this into perspective, in 2009, the revenue of Chongqing to properly Municipality was only a quarter of 's. enforce the [wastewater The wastewater needs of Metropolitan Chongqing are growing at treatment] a faster pace than its wastewater treatment capabilities standards. Due to rapid economic development in Chongqing, both environmental protection planning and supporting facilities in some industrial zones and new developing zones are not up to code. The quality of the wastewater collection pipe network is also quite poor, resulting in pollution accidents such as broken pipes and wastewater leakages.

The growth of medium and small-scale private enterprises in Chongqing is rapid and most are not properly disposing of their wastewater. Additionally, the government ― both at the municipal and local level ― lacks the administrative means and regulatory clout to properly enforce the standards.

The total number of Metropolitan Chongqing’s permanent residents, coupled with its floating population is almost ten million people, who altogether produce more than 200,000 tonnes of feces and wastewater a day. Before the 1990s, sewage for the most part was used to fertilize crops in rural areas, but now all of it is dumped directly into rivers along with wastewater, resulting in a level of E. coli levels exceeding the normal standard in the Yangtze and Jialing Rivers.

13 Wastewater Treatment in the Three Gorges Reservoir Region (Below Metropolitan Chongqing)

Wastewater treatment plants have been built in each of the districts and counties along the Three Gorges Reservoir below Metropolitan Chongqing. They are owned and operated by four companies: the Yudong, Yuxi, Sanxia and Urban Chongqing Drainage Companies respectively. Wastewater treatment plants were also built in each county seat along the Three Gorges Reservoir, with a designed treatment capacity of less than 50,000 tonnes daily. They are constantly faced with a shortage of operation funds. There are Before the 1990s, hundreds of towns with populations of more than 10,000 in the sewage for the reservoir area. They produce millions of tonnes of sewage daily, most part was most of which is dumped directly into rivers, making them the used to fertilize main sources of wastewater pollution in the Three Gorges crops in rural Reservoir Region on the Yangtze River. areas, but now all

Currently, there are three big chemical complexes in the of it is dumped Chongqing section of the reservoir area – Changshou Natural Gas directly into Chemical Plant, Fuling Pharmaceutical and Agricultural Chemical rivers along with Plant, and Wanzhou Salt Chemical Plant – all of which are big wastewater, polluters. Currently, only the Changshou Chemical Industrial Zone resulting in a has a wastewater treatment plant, which has a daily treatment level of E. coli capacity of 40,000 tonnes. levels exceeding The next most important source of pollution in the Municipality of the normal Chongqing section of the reservoir area is agricultural pollution. It standard in the flows into the main channel of the Yangtze River along with Yangtze and surface water and has caused eutrophication in the reservoir, which Jialing Rivers. adversely affects water quality.

Finally, both industrial wastewater and domestic sewage flow into the Three Gorges Reservoir from provinces such as Yunan, , and , upstream of Metropolitan Chongqing, and pose yet another serious threat to the water quality in the reservoir area. These include, most notably, the industrial pollution from phosphorus chemical plants in Mianzhu, petro-chemical plants in , chromium salt chemical plants in Anxian County, and medical chemical plants in Leshan, all located in Sichuan Province. Natural gas chemical plants in Yunan Province and natural gas chemical plants in Chishui City in Guizhou Province are also notable polluters. Additionally, domestic waste produced by more than 100 million people in Chengdu, Mianyang, Zigong, , Neijiang, and dozens of other medium and large-sized cities, also flows into the Three Gorges Reservoir area.

14 Recommendations

The desperate need for adequate water treatment in the Three Gorges Reservoir Region is faced by municipalities and city regions around the world. Whether their infrastructure is aging and in need of repair and replacement, or is simply inadequate to meet the needs of a growing population, the challenges for many cities are similar. The good news is that there are solutions.

Municipal water and wastewater utilities around the world — the Public majority of which are publicly financed, publicly owned, and publicly operated — do not serve their customers well. In this wastewater regard, China is no exception. Many of the systems that treat and management distribute drinking water perform poorly, and many of those that systems lack the collect and treat wastewater for re-entry into the water cycle are resources to among the worst polluters. These problems are likely to worsen as correct current infrastructure ages and as populations grow. failings and There are a number of reasons why municipalities are unable to address future provide water that is safe for human consumption and industrial challenges. They use, and treated wastewater that does not degrade water systems. lack the Often they lack the resources to correct current failings and address professional future challenges. They lack the professional capacity to plan capacity to plan infrastructure improvements, and the capital to finance them. infrastructure They also lack the skilled labour to operate infrastructure. Most improvements, important, they lack the political will to overcome their and the capital to deficiencies. Few municipalities are willing to set water and finance them. wastewater rates that are high enough to pay for sustainable systems. And few feel real pressure to improve their performance — especially that of their wastewater treatment systems — since conflicts of interest prevent public regulators from vigorously enforcing environmental laws and regulations against public utilities. It is nigh impossible for governments to regulate themselves: they rarely do so successfully, wherever they are in the world. It is human nature to avoid culpability, opprobrium, and liability.

Private water and wastewater service providers are, on the other hand, well positioned to help municipalities address the challenges they face.19 Many have access to large pools of capital. Many have been in the business for decades and have developed extraordinary operating expertise. Engaged through competitive contracting and governed by performance-based contracts, private providers have incentives to find efficiencies and perform well. Competition can also improve publicly run operations.

15 To ensure that private water operators provide safe water and protect the water environment, their operations must be governed by the rule of law and they must be held accountable through transparent and independent regulation that is itself subject to judicial review. The governments that issue contracts to private providers must have true arms-length relationships with those providers: if they do not, cronyism in the assignment of risks and rewards will result and wastewater treatment providers will not be held liable for their failure to deliver clean and safe water.

In addition to enlisting the capital and technology of the private sector in meeting municipal water needs, water must be priced to reflect scarcity. To that end, full-cost pricing for all water used by residential, commercial, and industrial users must be employed. No Private water sectors – including agriculture – should be exempt from water operators … charges. Municipal water charges should fully recover the costs of must be governed providing water and wastewater services. by the rule of law Provincial water charges should fully recover the costs of and they must be managing the resource. They should also reflect the value and held accountable scarcity of the raw resource and the amount of water consumed. through transparent and Pricing should involve several components. Prices should be independent designed to fully recover administrative costs, to reflect the value of the water used, and to reflect the extent to which the water is regulation that is consumed. (These charges should, of course, be in addition to any itself subject to charges imposed by municipalities or other suppliers to recover the judicial review. costs of treating and distributing water.)

Water’s value depends on many factors, including where the water is located, how plentiful or scarce it is, and how much competition there is for it. Charges should vary across geography to reflect such factors.

Water charges should be substantially higher for water that is consumed than for water that is returned to the source. (The former is in effect being purchased, while the latter is merely rented.) Whenever possible, consumption should be assessed for specific users rather than estimated for an entire sector. Furthermore, the customary definition of consumption should be broadened.

16 The conventional definition counts consumptive use as the portion of a withdrawal that is lost or otherwise not returned to the source due to evaporation, incorporation into products, or other processes. The consumptive use of water should be redefined to include any use that makes water unavailable for other uses. Pollution, or any other use that precludes water from being used in other ways, should be considered a consumptive use. To ensure that Only by charging the true cost of water will jurisdictions with pollution sources constrained water resources be able to conserve water. do not continue to grow unchecked Conclusion along the Three Gorges Reservoir To ensure that pollution sources do not continue to grow region, the rule of unchecked along the Three Gorges Reservoir region, the rule of law, public oversight, and market discipline must prevail. law, public Empowering citizens with good laws that are enforceable in a oversight, and credible judicial system will help them make polluters pay and thus market discipline protect the Yangtze River, China’s Golden Waterway. The must prevail. alternative is to allow pollution sources to grow, unchecked and with impunity, at incalculable cost to the health of China’s environment and its citizens.

17 Endnotes

1 The Municipality of Chongqing, created in 2007, is a "direct-controlled municipality." In the People's Republic of China, a province-level Municipality (of which there are four: , Shanghai, , and Chongqing) is the highest classification level for cities and is controlled directly by the central government. According to the Chongqing Municipal government website, Chongqing is the only municipality directly under the central government in . Located on the upper reaches of the Yangtze River, the Chongqing Municipality is southwest China's biggest industrial and commercial center, communication hub, and inland port.

2 Wastewater is any water that has been adversely affected in quality by anthropogenic influence. It is comprised of liquid waste discharged by domestic residences, commercial properties, industry, and/or agriculture, and can be affected by a wide range of contaminants. "Wastewater" commonly refers to the municipal wastewater that contains a broad spectrum of contaminants resulting from the mixing of wastewater from homes, services, businesses, industrial areas, and often storm drains, especially in older sewer systems. Sewage is the subset of wastewater that is contaminated with feces or urine, though the term is sometimes used to mean any wastewater. In this report, they are used interchangeably.

3 Chongqing Statistical Yearbook, 2011.

4 For more information, please see the Chongqing Municipal Government website at .

5 All figures in this paper, unless noted otherwise, were collected during on-site visits and interviews with plant personnel. Any questions about the figures presented should be relayed to Probe International.

6 China has established a water quality classification system based on purpose of use and protection target, following Environmental Quality Standard GB3838-2002: Grade I Applies to water sources and national nature reserves Grade II Applies to class A water source protection areas for centralized drinking water supply, sanctuaries for rare fish species and spawning grounds for fish and shrimp Grade III Applies to class B water source protection areas for centralized drinking water supply, sanctuaries for common fish species and swimming zones Grade IV Applies to water bodies for general industrial water supply and recreational waters in which there is no direct human contact with the water Grade V Applies to water bodies for agricultural water supply and for general landscape requirements Grade V+ Not to be used Sources: Beijing’s Water Crisis 1949 — 2008 Olympics, Probe International Beijing Group, June 2008; CHINA: Water Quality Management— Policy and Institutional Considerations, Environment and Social Development — East Asia and Pacific Region, Discussion Papers, The World Bank, September 2006.

7 According to the US Environmental Protection Agency website, nonpoint source pollution generally results from land runoff, precipitation, atmospheric deposition, drainage, seepage or hydrologic modification. The term "nonpoint source" is defined to mean any source of water pollution that does not meet the legal definition of "point source" in section 502(14) of the Clean Water Act. That definition states: The term "point source" means any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged. This term does not include agricultural storm water discharges and return flows from irrigated agriculture. Unlike pollution from industrial and sewage treatment plants, nonpoint source (NPS) pollution comes from many diffuse sources. NPS pollution is caused by rainfall or snowmelt moving over and through the ground. As the runoff moves, it picks up and carries away natural and human-made pollutants, finally

18 depositing them into lakes, rivers, wetlands, coastal waters and ground waters.

8 Provided by the Chongqing Development and Reform Commission.

9 See http://www.cncqsw.com/.

10 Provided by the Chongqing Downtown Drain Company.

11 See http://www.cncqsw.com/.

12 Ibid.

13 See http://www.cqstjt.com/waterweb/. 14 Ibid.

15 Wetland biotechnology wastewater treatment facilities can be installed in small scale facilities. This makes them particularly well suited to Chongqing's irregular and mountainous terrain where a decentralized water treatment system is more technically and economical viable than a centralized system.

16 As of November 2012, the rate is set at 3.5RMB/tonne.

17 The Sequencing Batch Reactor (SBR) process has been extensively used in Europe and the United States in the past two decades. The SBR process is an activated sludge process in which the sewage is introduced into a Reaction Tank (or SBR Tank), one batch at a time. Wastewater treatment is achieved by a timed sequence of operations which occur in the same SBR Tank, consisting of filling, reaction (aeration), settling, decanting, idling, and sludge wasting. For further information, see ABL Environmental Consultants Limited description of the SBR process .

18 For further technical details, see http://www.gec.jp/jsim_data/water/water_2/html/doc_231.html.

19 See http://water.epa.gov/polwaste/nps/whatis.cfm.

For an excellent description of how private municipal wastewater treatment services can solve municipal needs see The Economic Water Cycle by Elizabeth Brubaker, Executive Director, Environment Probe, the 2007 EPCOR Distinguished Lecture to the Centre for Applied Business Research in Energy and the Environment in Edmonton, Alberta, October 18, 2007. Ms. Brubaker explains that there are three common problems that commonly plague publicly financed and publicly operated water utilities: inadequate infrastructure, insufficient operating expertise, and a lack of accountability. Greater private-sector involvement, and a more competitive market for water services, can help address each of these problems.

Some of the infrastructure problems reflect chronic underinvestment. Neither municipal governments, nor those at a higher level, have shown a willingness to invest the capital required, while the private sector has. Indeed, some water companies have the capacity to invest enormous sums. In England and Wales, water companies have invested more than £50 billion. Infrastructure funds also have the capacity for large investments. In 2006, globally, approximately $100 billion in new money was raised for such funds. In Canada, two large pension funds are putting their money into water utilities: in 2006, the Canada Pension Plan (the national pension plan) offered $1 billion to buy one-third of a water utility in the UK. In August of 2007, the Ontario Teachers’ Pension Plan announced its second investment in Chilean water utilities.

The benefits are numerous: private capital reduces the conflicts of interest that prevent governments from demanding improvements to inadequate infrastructure; competition for contracts creates incentives to design and operate systems efficiently; the contracting process can also create incentives for good performance; municipalities can write incentives into the contracts. They can structure contracts to reward good performance and to penalize bad performance; and, contracts can set tough operating standards. They can guarantee water quality, monitoring and reporting procedures, maintenance levels, and customer

19 service levels. They can guarantee schedules and costs. And they can provide for steep fines – or even termination – if they aren’t met. Enforceable contracts give municipalities meaningful control over their utilities. They enable municipalities to compel compliance.

In short, they are invaluable accountability mechanisms.

Contracting out the operations of water utilities creates other levels of accountability as well. One of the most important of these is regulatory accountability (i.e. eliminates the old boy networks.)

Involving private partners in the financing and operation of water utilities will help to solve that problem. It will put greater distance between utilities and regulators. It will help resolve the conflicts of interest that so often prevent regulators from doing their jobs. In other words, it will free up regulators to regulate.

20 Resources

Beijing Water Report. Rep. Probe International, July 2010. .

Brubaker, Elizabeth. "The Economic Water Cycle." 2007 EPCOR Distinguished Lecture Presented by the Centre for Applied Business Research in Energy and the Environment. Edmonton. 18 Oct. 2007. Lecture.

China Water Quality Management: Policy and Institutional Considerations. The World Bank, Sept. 2006. .

"Chongqing Municipal Government | Mayor's Office." Chongqing Municipal Government | Mayor's Office. .

"Chongqing Statistical Yearbook Database-Statistical Yearbook Navigation." China Statistical Yearbook Database-Statistical Yearbook Navigation. .

"Environmental Quality Standard for Surface Water (GB 3838-2002)." Ministry of Environmental Protection, 1 June 2002. .

"Oxidation Ditch." Oxidation Ditch. Global Environment Centre. .

"SBR Process." ABL Environmental Consultants Ltd. 28 Sept. 2012. .

"What Is Nonpoint Source Pollution?" United States Environmental Protection Agency. 28 Sept. 2012. .

21 APPENDIX 1: Wastewater Treatment in Metropolitan Chongqing

Number of Daily Daily Large and Population Wastewater Treated Wastewater Wastewater Medium-sized District (in Collection Effluent Production Treatment Wastewater thousands) Rate Disposal (km3 ) (km3 ) Treatment plants Jialing Shapingba 1000 210 90% 195 4 River Yangtze Jiulongpo 1080 230 90% 210 4 River Yangtze Nan'an 759 180 94% 170 2 River Yangtze Jiangbei 738 200 97% 195 1 River Yangtze Ba'nan 918 120 92% 110 2 River Yangtze Dadukou 300 110 88% 97 2 River Yangtze Yubei 1340 290 90% 261 3 River Jialing Beibei 684 160 85% 136 1 River Yangtze Yuzhong 630 250 95% 235 n/a* River

Total 7449 1750 91% 1609 19

* The wastewater produced by Yuzhong District is treated by Jiguanshi Sewage Treatment Plant in Nan'an District.

22

APPENDIX 2: Large and Medium-sized Wastewater Treatment Plants in Metropolitan Chongqing

Wastewater Wastewater Treated Treatment Year District Treatment Address Effluent Owner Capacity Built Plant Disposal (km3) Xiyong Tuzhu Town, Chongqing Wastewater Jialing Shapingba Shapingba 30 2008 Water Group Treatment River District Co. Ltd. Plant Tuzhu Tuzhu Town, Chongqing Wastewater Jialing Shapingba Shapingba 50 2006 Water Group Treatment River District Co. Ltd. Plant Jingkou Jingkou Chongqing Wastewater Town, Jialing Shapingba 20 2006 Water Group Treatment Shapingba River Co. Ltd. Plant District Huilongba Huilong Shapingba Wastewater Town, Jialing Shapingba 2.4 2010 Drain Treatment Shapingba River Company Plant District Caiyunhu Chenjiaping Jiulongpo Wastewater Street, Yangzte Jiulongpo 17 2005 Drain Treatment Jiulongpo River Company Plant District Yangsheng Chenjiaping Jiulongpo Wastewater Street, Yangzte Jiulongpo 12 2006 Drain Treatment Jiulongpo River Company Plant District Baihan Hangu Jiulongpo Wastewater Town, Jialing Jiulongpo 25 2008 Drain Treatment Jiulongpo River Company Plant District Xipeng Tongguanyi Jiulongpo Wastewater Town, Yangzte Jiulongpo 35 2008 Drain Treatment Jiulongpo River Company Plant District Jiguanshi Jiguanshi Chongqing Wastewater Street, Yangzte Nan'an 600 2003 Water Group Treatment Nan'an River Co. Ltd. Plant District Chayuan Yinglong Chongqing Wastewater Town, Yangzte Nan'an 30 2008 Water Group Treatment Nan'an River Co. Ltd. Plant District Jiazixi Jiazixi Street, Chongqing Wastewater Yangzte Dadukou Dadukou 50 2005 Water Group Treatment River District Co. Ltd. Plant Note: All wastewater is treated in accordance with Water Treatment Discharge Standard GB18918-2002 Class 1, Standard B 23

(Appendix 2 continued)

Wastewater Wastewater Treated Treatment Year District Treatment Address Effluent Owner Capacity Built Plant Disposal （km3) Dajiu Tiaodeng Chongqing Wastewater Town, Dadukou 35 2007 Yangzte River Water Group Treatment Dadukou Co. Ltd. Plant District Tangjiatuo Tangjiatuo Sino French Wastewater Street, Water Jiangbei 300 2005 Yangzte River Treatment Jiangbei Investment Plant District Co. Ltd. Yudong Yudong Chongqing Wastewater Street, Ba'nan 50 2003 Yangzte River Water Group Treatment Ba'nan Co. Ltd. Plant District Lijiatuo Lijiatuo Street, Chongqing Wastewater Ba'nan Ba'nan 40 2007 Yangzte River Water Group Treatment Treatment Co. Ltd. Plant Plant Beibei Tianshengqi Chongqing Wastewater ao Street, Beibei 50 1996 Jialing River Water Group Treatment Beibei Co. Ltd. Plant District Chengnan Shuangfeng Wastewater qiao Street, Yubei Drian Yubei 20 2002 Yangzte River Treatment Yubei Company Plant District Qianshuitan, Chengbei Gangshang Wastewater Yubei Drian Yubei Village, 30 2004 Yangzte River Treatment Company Yubei Plant District Xiaojiahe Agricultural Wastewater Yubei Drian Yubei Zone, Yubei 20 2004 Yangzte River Treatment Company District Plant

24

APPENDIX 3: Wastewater Treatment Plants under Construction, Extension and Proposed

for Nine Districts of Metropolitan Chongqing

Wastewater Daily Treatment District Status Owner Treatment Plant Capacity (km3) Chongqing Water Tuzhu Wastewater Shapingba Extension 50 Resources Treatment Plant Investment Group Xiyong Wastewater Planned to Chongqing Water Shapingba 70 Treatment Plant Expand Group Co. Ltd. Tangjiatuo Chongqing Sino Jiangbei Wastewater Extension 300 French Water Treatment Plant Investment Co. Yufu Industry Zone Planned to be Jiangbei Drain Jiangbei Wastewater 100 built Company Treatment Plant Gangcheng Industry Under Jiangbei Drain Jiangbei Zone Wastewater 10 Construction Company Treatment Plant Xiema Wastewater Under Beibei Drain Beibei 10 Treatment Plant Construction Company

Caijia Wastewater Under Beibei Drain Beibei 40 Treatment Plant Construction Company

Baihan Wastewater Under Jiulongpo Drain Jiulongpo 25 Treatment Plant Construction Company Tongguanyi Under Jiulongpo Drain Jiulongpo Wastewater 30 Construction Company Treatment Plant Jiazixi Wastewater Chongqing Water Dadukou Extension 50 Treatment Plant Group Co. Ltd.

Dajiu Wastewater Planned to be Chongqing Water Dadukou 35 Treatment Plant built Group Co. Ltd.

Lijiatuo Wastewater Chongqing Water Ba'nan Extension 40 Treatment Plant Group Co. Ltd.

Yudong Wastewater Ba'nan Drain Ba'nan Extension 30 Treatment Plant Company

Jieshi Wastewater Planned to be Ba'nan Drain Ba'nan 40 Treatment Plant built Company

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